The Expert Podcast

• This episode is a big wake-up call for companies that have or want to get cyber liability insurance.
• As an insured company, you must follow strict guidelines to maintain coverage, including keeping your systems updated and following proper cybersecurity procedures.
• Insurance companies set specific requirements you must meet to keep your cyber liability protection.
• Example case:
  • A company suffered a hack and financial loss, then filed a claim.
  • The insurer denied the claim because the company failed to follow basic security practices required in their policy.
  • One key requirement was the use of Multi-Factor Authentication (MFA), which adds a security code besides just a password.
• Although the company’s application stated MFA was enabled, investigations revealed MFA was only used to protect their firewall and not other critical systems.
• The insurance company sought to rescind the policy, claiming they would not have issued it if they had known MFA was not fully implemented.
• This case highlights a loophole and the insurer’s effort to avoid paying claims when insured parties do not comply with stated security measures.
• Key takeaway:
  • If your cyber liability insurer gives you specific requirements, follow them carefully.
  • Using MFA and other security measures can prevent breaches and reduce claim disputes.
• Even if inconvenient, using MFA could have prevented the ransomware attack and the resulting claim denial.
• Misrepresenting or omitting facts on your insurance application can be considered material and lead to claim denial or policy rescission.
• This case happened in 2020, when hackers accessed an admin account due to lack of MFA.
• The insurer, Travelers, wants the court to declare the policy void and refuse payment of the claim.
• We invite you to share your thoughts:
  • How would you handle this if you were the company or insurer?
  • What lessons should businesses take from this event?
• Always get clear descriptions of your insurer’s cybersecurity requirements before accepting cyber liability insurance.